While the business sector can expect fluctuations of value on the order of 14% on average due to changes in reputational value, the academic sector can expect to shine or suffer a slow and ignoble death -- or at least a brief period of panic . Huygens enjoys regaling in stories of Universities that earn their reputation the old fashioned way - by producing graduates who go on to distinguished careers.

Purdue University can rightfully boast about such a story. It is the number one producer of American astronauts.
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A reputation crisis often follows a failure in an operational process when stakeholders hold the board culpable for a concomitant failure in governance, controls and risk management. There are specific strategies companies can follow, and products companies can acquire, that can protect Directors and Officers from undeserved opprobrium.

However, from time to time, the failure starts at the board level without any operational antecedent. There is little a company or an institution can do to deflect the well-deserved opprobrium other than listen to stakeholders, assess the importance of their support, and to find someone to fall on a sword. In the recent past, Susan Komen's Race for the Cure and Chick Fil-A had their self inflicted wounds spotlighted after positions were taken in the culture wars.

Months after the Susan G. Komen Foundation for the Cure made national headlines for halting then reinstating funding to Planned Parenthood, the organization's two top executives, its founder and president, stepped down. With Chick Fil-A, CEO Dan Cathy shared his experience after making public homophobic remarks with the Huffington Post, "“Every leader goes through different phases of maturity, growth and development and it helps by (recognizing) the mistakes that you make,” Cathy told the AJC. “And you learn from those mistakes. If not, you’re just a fool. I’m thankful that I lived through it and I learned a lot from it."

More recently, it was (re)revealed that now-former Mozilla CEO Brendan Eich had six years ago donated $1,000 to a group opposing same-sex marriage. Within two weeks of the public outcry, the board "allowed" the co-founder of the Mozilla project, which developed the Firefox browser, to step down. Of course, had the board done its homework, it would have found that the controversial donation was first hotly debated two years ago. Only then, Eich was not the CEO.

Meanwhile, at the centers of higher learning, the lessons are not sticking any better. Penn State University, whose former President, Graham Spanier is charged with covering up a child molestation scandal to protect the school's football program, has recently hired a new President who's prior school is being rocked by allegations of downplaying a rape scandal to protect the school's football program. According to Bloomberg, "the New York Times has a front-page investigative story (and accompanying interactive) accusing both the school and local police of mishandling a Florida State University student’s report that she was raped by Jameis Winston, FSU’s star quarterback and winner of the 2013 Heisman Trophy." Penn State spokeswoman Lisa Powers wrote to Bloomberg that “Penn State Trustees conducted all appropriate, thorough background checks and investigations required by institutional policy.”

Reputation risk is the threat that stakeholders will discover that a company, foundation, or university is unable to meet their expectations, and as a result, change their expectations with resulting adverse economic consequences. There are strategies to align expectations and control operations. The first strategy is not to score an own goal.

Not-for-profits are measured by their reputation. Readers of Huygens' missives know better than to conclude that a not-for-profit's path to success is maximizing likeability. Not one would mistake a reputation for operational excellence -- clinical excellence, academic excellence, effective resolution of malnourishment, or even effective advocacy of class rights -- with the marketing notion of "likeability." No, not one.

In late 2011, the Society sponsored a Mission Intangible Monthly Briefing on the problem of measurement at not-for-profit organizations. But perhaps reputation is not merely something to measure. Dennis Fischman, a not-for-profit communications expert, puts it this way. "Nonprofit organizations live and die by our reputation. It's what
brings us clients, volunteers, funding, and dedicated staff who could earn more in a for-profit setting." Read more.

Ironically, not-for-profits whose worlds depend so much on trust, would do well to repeat the mantra of Alan Greenspan, former chairman of the Federal Reserve. "In a market based on trust, reputation has enormous value."

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On 30 March, Susan G. Komen for the Cure founder Nancy Brinker sent a letter on Friday to members of Congress, apologizing for the organization’s “mistakes” during the recent controversy over Planned Parenthood grants — and asking representatives to support funding for an early breast cancer detection program. The letter appears to have been in lieu of the organization’s annual “Lobby Day” in Washington, D.C., held last year on 14 April. At the annual lobbying day, activists push for government programs, not for Komen programs. These government programs focus on cancer research and early detection and treatment for underserved women.

A week earlier, the Washington Post reported ongoing turmoil with several executives at headquarters and affiliates departing, questions arising about fundraising ability, and structural changes underway to give affiliates more influence.
On 27 March, Harris Interactive reported Komen’s 2012 brand equity score. “Susan G. Komen has consistently rated as either the first or second most equitable non-profit organization in its category. This year, SGK fell 54 spots to 56th place out of 79 non-profit brands surveyed. …Komen’s current brand equity score of 55.1 represents a 21% drop in brand equity over the prior year ─ a historic drop in the study's 23-year history, surpassed only by Fannie Mae in 2009.”

The reputation crisis continues at SGK. There is a road to reputation restoration, but Komen has yet to take the third step and most important step – establishing processes that will prevent a repeat of that which triggered the prior crisis. Unlike Penn State, another not-for-profit institution to be rocked by a reputational crisis recently that has taken mitigation steps, there is no evidence that SGK has figured out what that means.

SGK positioned itself as a non-partisan religiously agnostic organization focused on women's health issues related to cancer. It has acknowledged that it erred in cutting off Planned Parenthood and alienating a constituency that interpreted the action as a partisan expression. In doing so, it alienated a second constituency that viewed the reversal as a partisan expression.

Here is what it can do to restore its reputation.

1. Komen needs to apologize for making sweeping operational decisions that might be interpreted as partisan.
2. Komen needs to review its decision making processes and ensure that going forward they are appreciated for being (authentically) non-partisan
3. Komen needs to make it clear to its broad constitiuency that it will share knowledge gained in #1 and #2 to help other organizations with non-partisan missions walk the fine line and avoid a similar crisis.

The Financial Times (November 11, Bullock) focused on it right away: "'Higher education is first and foremost a business that is driven by reputation,' said John Nelson, head of higher education research at Moody’s. 'Student demand, the attraction of faculty and the ability to draw donations are all based on reputation.'
Moody’s said it will evaluate 'the potential scope of the reputational and financial risk' arising from the allegations, including potential lawsuits and settlements, weaker student demand or philanthropic support, changes in the university’s relationship with the state and significant management or governance changes."

Reputation is an epiphenomenon. It is a product of how an entity executes one or more of six core functions: ethics, quality, innovation, safety, sustainability, and security. Three of these have been called into question by the Penn State University sexual abuse scandal.
The Pennsylvania attorney-general has filed criminal charges involving child sexual abuse against Jerry Sandusky, a former assistant football coach, as well as perjury and failure to report charges against two senior university officials, including the chief financial officer.

In our current culture, the path to reputation restoration includes rolling heads. Swift retribution is demanded, and and innocent blood may be part of the cost to save the many.
The reign of terror had its merits, but it was not necessarily the best path towards a just and democratic system. We can only hope that the lessons taken from this latest reputational crisis are that better preventative processes are preferable to the guillotine.